1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,960 Speaker 2: Terminal and the Bloomberg Business App. Francis Donald of RBC writing, 10 00:00:38,040 --> 00:00:40,639 Speaker 2: US tariffs in the size that they have been floated, 11 00:00:40,960 --> 00:00:43,479 Speaker 2: or even a fraction of that size, could filter into 12 00:00:43,520 --> 00:00:48,400 Speaker 2: the Canadian economy immediately, significantly and then persistently for many years. 13 00:00:48,520 --> 00:00:51,280 Speaker 2: Francis joins us now for more and Francis, maybe we've 14 00:00:51,320 --> 00:00:54,040 Speaker 2: avoided them, maybe they happen in one month's time. I 15 00:00:54,160 --> 00:00:55,840 Speaker 2: don't know. But what I'd love to hear from you 16 00:00:56,280 --> 00:00:59,560 Speaker 2: is the price of the uncertainty? What is the price 17 00:00:59,560 --> 00:01:00,400 Speaker 2: that we have to pi. 18 00:01:01,400 --> 00:01:04,000 Speaker 1: Well, even though this trade shock that we look to 19 00:01:04,040 --> 00:01:06,919 Speaker 1: have avoided would have been the largest in one hundred 20 00:01:07,000 --> 00:01:10,440 Speaker 1: years for the North American economy. We do have some 21 00:01:10,560 --> 00:01:13,120 Speaker 1: things that we know about terriffs and the threat of 22 00:01:13,200 --> 00:01:16,840 Speaker 1: tariffs from the twenty eighteen twenty nineteen experiences, and one 23 00:01:16,920 --> 00:01:19,360 Speaker 1: of them is even just the existence that they may 24 00:01:19,400 --> 00:01:25,160 Speaker 1: occur has historically stalled business investment, household decisions. It creates 25 00:01:25,200 --> 00:01:28,480 Speaker 1: an uncertainty tax on the entirety of these economies that 26 00:01:28,600 --> 00:01:31,440 Speaker 1: businesses lack clarity on what will happen next. So it 27 00:01:31,440 --> 00:01:34,440 Speaker 1: wouldn't surprise me if we see a pause in business activity, 28 00:01:34,640 --> 00:01:37,880 Speaker 1: a hit to business competence in the United States, Canada, 29 00:01:37,920 --> 00:01:40,679 Speaker 1: and in other countries, and we see this distorting more 30 00:01:40,720 --> 00:01:42,720 Speaker 1: of the Q one data on top of a period 31 00:01:42,880 --> 00:01:45,480 Speaker 1: which historically we have a lot of trouble understanding the 32 00:01:45,560 --> 00:01:47,440 Speaker 1: data from for seasonly adjusted reason. 33 00:01:47,800 --> 00:01:48,200 Speaker 3: Francis. 34 00:01:48,240 --> 00:01:50,320 Speaker 4: The way that John put it earlier was the some 35 00:01:50,560 --> 00:01:54,000 Speaker 4: anti growth measures were being floated and dealed with, dealt 36 00:01:54,040 --> 00:01:56,320 Speaker 4: with now by Donald Trump, and later there'll be the 37 00:01:56,320 --> 00:01:57,440 Speaker 4: pro growth measures. 38 00:01:57,840 --> 00:01:58,800 Speaker 3: Are these hits to. 39 00:01:58,800 --> 00:02:02,480 Speaker 4: Potential growth offset with tax cuts and some of the 40 00:02:02,480 --> 00:02:03,320 Speaker 4: other proposals. 41 00:02:04,400 --> 00:02:06,640 Speaker 1: We haven't been able to make the math work on 42 00:02:06,840 --> 00:02:10,840 Speaker 1: tariff revenue matching tax cut needs. But what's really critical 43 00:02:10,880 --> 00:02:12,880 Speaker 1: here in Lisa I think you nailed it is the 44 00:02:12,919 --> 00:02:17,480 Speaker 1: sequence of these events. Trade shocks, tariffs, they're saxflationary. We 45 00:02:17,560 --> 00:02:21,320 Speaker 1: know that to be true. They limit growth, they create inflation. 46 00:02:21,720 --> 00:02:24,400 Speaker 1: But then you might see, for example, tax cuts that 47 00:02:24,480 --> 00:02:28,160 Speaker 1: come through deregulation that tends to be pro growth, pro inflation. 48 00:02:28,600 --> 00:02:30,760 Speaker 1: And I think what's key here is that almost all 49 00:02:30,800 --> 00:02:34,280 Speaker 1: of the policies that we've floated from Washington do have 50 00:02:34,360 --> 00:02:37,799 Speaker 1: an inflationary element, but markets will care less about that, 51 00:02:37,880 --> 00:02:39,800 Speaker 1: and the US will be able to absorb more of 52 00:02:39,800 --> 00:02:42,480 Speaker 1: that inflation if it comes with a side of growth. 53 00:02:42,800 --> 00:02:44,760 Speaker 1: And that's why I think you're seeing a lot more 54 00:02:44,800 --> 00:02:47,919 Speaker 1: concern about the inflationary elements of tariffs than you are, 55 00:02:48,000 --> 00:02:51,440 Speaker 1: for example, the inflationary elements of corporate tax cuts now 56 00:02:51,520 --> 00:02:54,600 Speaker 1: underlying the surfaces. I think the real inflationary story, and 57 00:02:54,639 --> 00:02:56,840 Speaker 1: the one that should be concerning us most of all, 58 00:02:57,120 --> 00:03:01,400 Speaker 1: is that the US lacks workers jobs. It is heading 59 00:03:01,440 --> 00:03:05,079 Speaker 1: into a period where it's going to experience real demographic challenges. 60 00:03:05,160 --> 00:03:08,280 Speaker 1: We expect the labor participation rate to decline in twenty 61 00:03:08,320 --> 00:03:11,799 Speaker 1: twenty five. We have the least amount of workers ever 62 00:03:11,960 --> 00:03:14,440 Speaker 1: working in the United States right now, the most amount 63 00:03:14,480 --> 00:03:17,760 Speaker 1: of retirees if we see a change to immigration policy, 64 00:03:17,800 --> 00:03:19,800 Speaker 1: in fact we're already seeing some of that. We're going 65 00:03:19,840 --> 00:03:23,080 Speaker 1: to see more challenges to labor supply. That's going to 66 00:03:23,080 --> 00:03:25,560 Speaker 1: be the most nefarious form of inflation as it pushes 67 00:03:25,639 --> 00:03:29,080 Speaker 1: up way just good but flows through the economy more broadly. So, 68 00:03:29,200 --> 00:03:32,079 Speaker 1: inflation is one word, but there's all different types of inflation, 69 00:03:32,120 --> 00:03:35,520 Speaker 1: and all these policies carry different variations of good inflation 70 00:03:35,680 --> 00:03:36,480 Speaker 1: and bad inflation. 71 00:03:36,640 --> 00:03:39,160 Speaker 4: Francis, there's so much uncertainty that FED officials are saying 72 00:03:39,240 --> 00:03:41,120 Speaker 4: very little and a lot of people are cheering that 73 00:03:41,200 --> 00:03:44,920 Speaker 4: and saying nobody knows. Have you seen enough to change 74 00:03:45,080 --> 00:03:47,840 Speaker 4: your outlook for the year when it comes to growth, 75 00:03:47,920 --> 00:03:50,440 Speaker 4: when it comes to inflation in the United States. 76 00:03:50,800 --> 00:03:54,840 Speaker 1: Well, we were prepared to downgrade our US growth forecast 77 00:03:54,920 --> 00:03:57,320 Speaker 1: if we had seen those twenty five percent tariffs on 78 00:03:57,360 --> 00:04:00,120 Speaker 1: Canada and Mexico come through. Those would have shocked to 79 00:04:00,240 --> 00:04:02,920 Speaker 1: US growth by a full percentage point in twenty twenty 80 00:04:02,920 --> 00:04:06,320 Speaker 1: five and lifted inflation by half. As of right now, 81 00:04:06,360 --> 00:04:08,839 Speaker 1: there's not enough even with the Chinese terces, to really 82 00:04:08,840 --> 00:04:11,680 Speaker 1: make a meaningful change in that outlook. But our US 83 00:04:11,760 --> 00:04:14,400 Speaker 1: rate strategist, Blake Gwynn has a really good line. He says, 84 00:04:14,400 --> 00:04:17,480 Speaker 1: the set is going to be watchful, not reactive. Of course, 85 00:04:17,480 --> 00:04:19,280 Speaker 1: the fet is filled with a lot of economists, and 86 00:04:19,320 --> 00:04:21,200 Speaker 1: I think economists on the street are going to be 87 00:04:21,240 --> 00:04:22,720 Speaker 1: doing something very similar to that. 88 00:04:22,880 --> 00:04:26,160 Speaker 2: How much has changed, Francis in the last three months. 89 00:04:26,400 --> 00:04:28,600 Speaker 2: I was listening to some comments from the Chicago Fed 90 00:04:28,640 --> 00:04:31,560 Speaker 2: President Ustin Goilsby the same amount of sync with what 91 00:04:31,600 --> 00:04:33,320 Speaker 2: I heard from him at the end of last year. 92 00:04:33,320 --> 00:04:33,839 Speaker 5: That's for sure. 93 00:04:33,880 --> 00:04:35,960 Speaker 2: Before Trump got into power, We've got to be more 94 00:04:35,960 --> 00:04:38,160 Speaker 2: careful with how fast to cut rights. 95 00:04:38,160 --> 00:04:39,720 Speaker 5: What has changed for them? 96 00:04:40,320 --> 00:04:42,840 Speaker 1: Well, we may feel a huge sense of relief over 97 00:04:42,880 --> 00:04:45,560 Speaker 1: the news from the past twenty four hours, but remember 98 00:04:45,640 --> 00:04:48,320 Speaker 1: this massive trade shock. And I got to be clear here, 99 00:04:48,560 --> 00:04:51,040 Speaker 1: this trade shock, twenty five percent tariffs on Mexico and 100 00:04:51,120 --> 00:04:54,560 Speaker 1: China would have brought the average import terror for Americans 101 00:04:54,680 --> 00:04:57,839 Speaker 1: up to almost eleven percent. It currently sits at three. 102 00:04:58,279 --> 00:05:01,560 Speaker 1: It's a quadrupling of the trade pressure that would exist 103 00:05:01,640 --> 00:05:04,960 Speaker 1: within the US economy. It didn't disappear. It's been paused 104 00:05:05,160 --> 00:05:07,920 Speaker 1: for one month. We still have the April First America 105 00:05:08,600 --> 00:05:12,960 Speaker 1: April first America first trade policy negotiations. We have USMCA 106 00:05:13,080 --> 00:05:16,760 Speaker 1: being negotiated. We're hearing a lot of chatter about European tariffs, 107 00:05:16,760 --> 00:05:19,240 Speaker 1: and then we have Chinese tariffs that came on that, 108 00:05:19,320 --> 00:05:21,440 Speaker 1: as you mentioned at the start of the segment, is 109 00:05:21,480 --> 00:05:24,279 Speaker 1: still a massive economic shock, and it would have to 110 00:05:24,320 --> 00:05:26,919 Speaker 1: have you reevaluate how you're looking at the economy in 111 00:05:26,920 --> 00:05:30,599 Speaker 1: twenty twenty five, especially if you're a central banker, because 112 00:05:30,600 --> 00:05:32,800 Speaker 1: if you're a central banker in that situation, you're having 113 00:05:32,839 --> 00:05:36,440 Speaker 1: to model growth down, inflation up. Some central banks only 114 00:05:36,440 --> 00:05:40,280 Speaker 1: have an inflation target. This central bank has a dual mandate, 115 00:05:40,360 --> 00:05:42,520 Speaker 1: and those mandates would go in the opposite direction. 116 00:05:42,880 --> 00:05:46,120 Speaker 2: A rockin' haant place and somewhere in between. Francis, appreciate 117 00:05:46,120 --> 00:05:47,560 Speaker 2: your time, soys Francis down. 118 00:05:47,520 --> 00:05:48,560 Speaker 5: With a Bomby c. 119 00:06:00,040 --> 00:06:02,280 Speaker 2: Find Saxon words join us now for more. If all 120 00:06:02,320 --> 00:06:04,599 Speaker 2: of Wall Street's horses and all of Wall Street's men 121 00:06:04,600 --> 00:06:07,520 Speaker 2: can't put the globalized economy back together again, how do 122 00:06:07,600 --> 00:06:10,440 Speaker 2: we think about where best to allocate assets? 123 00:06:10,560 --> 00:06:12,479 Speaker 5: What a question. Sarah Johns' is now for more, Serah, 124 00:06:12,480 --> 00:06:13,120 Speaker 5: good morning. 125 00:06:12,920 --> 00:06:13,279 Speaker 6: Good morning. 126 00:06:13,320 --> 00:06:15,039 Speaker 2: I'm going to talk about red wine from that way, 127 00:06:16,279 --> 00:06:18,359 Speaker 2: as much as I'd love to. Let's talk about this 128 00:06:18,800 --> 00:06:21,080 Speaker 2: the policy mix that we're going to see from this administration. 129 00:06:21,160 --> 00:06:23,279 Speaker 2: Does it a track capital or push it away. 130 00:06:23,720 --> 00:06:25,680 Speaker 7: I think that that's a million dollar question right now, 131 00:06:25,760 --> 00:06:27,520 Speaker 7: and it's certainly something that's been talked about for the 132 00:06:27,520 --> 00:06:29,159 Speaker 7: first week in a way that it wasn't talked about 133 00:06:29,200 --> 00:06:31,320 Speaker 7: in the first Trump one point er, right, There wasn't 134 00:06:31,400 --> 00:06:33,880 Speaker 7: an argument about capital then, And I think that that 135 00:06:34,880 --> 00:06:37,200 Speaker 7: what we're going to see is what we've seen so far, 136 00:06:37,279 --> 00:06:39,320 Speaker 7: which is, you know, going this way, going that way. 137 00:06:39,360 --> 00:06:40,920 Speaker 7: There's going to be a zigzag back and forth, and 138 00:06:40,960 --> 00:06:42,760 Speaker 7: I think it is hard to pin those things down. 139 00:06:43,120 --> 00:06:44,880 Speaker 7: So I don't know what the answer is yet, but 140 00:06:44,920 --> 00:06:47,160 Speaker 7: the big fear is that it does have a negative 141 00:06:47,160 --> 00:06:48,000 Speaker 7: effect on capital. 142 00:06:48,160 --> 00:06:50,120 Speaker 2: The consensus view seems to be that this is still 143 00:06:50,160 --> 00:06:52,760 Speaker 2: a pro growth administration, that it will attract capital. The 144 00:06:52,839 --> 00:06:55,279 Speaker 2: S and P five hundred is still around six thousand, 145 00:06:55,360 --> 00:06:57,520 Speaker 2: but there has been some damage done, particularly to the 146 00:06:57,520 --> 00:07:00,599 Speaker 2: auto makers. How investible do you think certain industries with 147 00:07:00,640 --> 00:07:01,880 Speaker 2: this cloud hanking over them? 148 00:07:02,400 --> 00:07:04,480 Speaker 7: Well, the tough thing for the automakers is that that's 149 00:07:04,520 --> 00:07:07,120 Speaker 7: a tough industry anyway, because it's so capital intensive and 150 00:07:07,160 --> 00:07:10,040 Speaker 7: things change so fast. So I think that there is 151 00:07:10,120 --> 00:07:13,680 Speaker 7: I mean, you obviously have seen on the semiconductor side, 152 00:07:13,720 --> 00:07:16,720 Speaker 7: those stocks have not really recovered, even though the market 153 00:07:16,760 --> 00:07:19,040 Speaker 7: seem to recover some of the issues from the deep seaks. 154 00:07:19,040 --> 00:07:20,840 Speaker 7: So I think that there's a variety of different things 155 00:07:20,880 --> 00:07:22,840 Speaker 7: going on at the moment, and people will start to 156 00:07:22,880 --> 00:07:26,000 Speaker 7: have more enthusiasms or less, either for different sectors or 157 00:07:26,000 --> 00:07:28,880 Speaker 7: different areas. But I think that this adding into the 158 00:07:28,920 --> 00:07:31,880 Speaker 7: tariff thing absolutely puts you a little bit more of 159 00:07:31,920 --> 00:07:35,480 Speaker 7: a question mark on going too deep into anything without 160 00:07:35,680 --> 00:07:38,480 Speaker 7: recognizing that there's possible issues that are coming. 161 00:07:38,800 --> 00:07:41,680 Speaker 4: We started the show with Steve Chivun of Federated and 162 00:07:41,720 --> 00:07:44,040 Speaker 4: he came on and he does his typical Monday morning 163 00:07:44,040 --> 00:07:47,200 Speaker 4: although it is Tuesday morning, he did his typical look, 164 00:07:47,320 --> 00:07:50,200 Speaker 4: does all of your horses look at the fundamentals. There 165 00:07:50,240 --> 00:07:51,960 Speaker 4: are a lot of good things going on out there, 166 00:07:51,960 --> 00:07:54,480 Speaker 4: and he's generally bullish, and he's looking to buy on 167 00:07:54,520 --> 00:07:56,760 Speaker 4: the dips, whether it's semiconductors or some of these other 168 00:07:56,800 --> 00:07:58,800 Speaker 4: spaces that have been disrupted by tariffs. 169 00:07:59,120 --> 00:08:00,480 Speaker 3: At what point do agree with that? 170 00:08:01,120 --> 00:08:04,160 Speaker 7: Well, I think that there have been already areas where 171 00:08:04,320 --> 00:08:07,600 Speaker 7: you have reasonably good value. I mean the discussion prior 172 00:08:07,640 --> 00:08:09,200 Speaker 7: to a lot of this was that the SMP equal 173 00:08:09,200 --> 00:08:10,520 Speaker 7: weight was going to start to catch up to the 174 00:08:10,560 --> 00:08:12,680 Speaker 7: S and P because the SMP was so heavy in 175 00:08:12,720 --> 00:08:14,960 Speaker 7: those top mag seven names. And so I think that 176 00:08:15,000 --> 00:08:17,080 Speaker 7: there are areas where you can look at the valuations 177 00:08:17,120 --> 00:08:18,960 Speaker 7: and go, you know, this is completely reasonable. You know, 178 00:08:19,000 --> 00:08:22,200 Speaker 7: you look at things like some of the materials food. 179 00:08:22,400 --> 00:08:25,160 Speaker 7: Some of the food stocks have gotten absolutely crushed. There 180 00:08:25,160 --> 00:08:27,120 Speaker 7: are a couple of different things that we like in 181 00:08:27,160 --> 00:08:30,000 Speaker 7: that area that have good dividend yields and reasonable valuations 182 00:08:30,040 --> 00:08:33,240 Speaker 7: ten thirteen, fourteen times earnings. That's not crazy given where 183 00:08:33,240 --> 00:08:35,680 Speaker 7: the SMP is right now. So there are obviously areas 184 00:08:35,679 --> 00:08:38,160 Speaker 7: that you can look at, but it is definitely more 185 00:08:38,200 --> 00:08:40,680 Speaker 7: of a nimbleness and you have to be watching things 186 00:08:40,760 --> 00:08:41,520 Speaker 7: much more closely. 187 00:08:41,880 --> 00:08:45,880 Speaker 4: We've seen the NASDAC underperform pretty considerably in text talks 188 00:08:45,920 --> 00:08:48,280 Speaker 4: in general for the past more than a month. Actually, 189 00:08:48,640 --> 00:08:51,200 Speaker 4: as you mentioned, they really haven't recovered at the same 190 00:08:51,200 --> 00:08:54,480 Speaker 4: time that you have seen this broadening out. Yesterday was 191 00:08:54,520 --> 00:08:57,400 Speaker 4: instructive in terms of what stocks would get most beaten 192 00:08:57,520 --> 00:08:59,720 Speaker 4: up as some of the trade tensions really picked up 193 00:09:00,120 --> 00:09:04,439 Speaker 4: small caps. So how much does the tariff talk threaten 194 00:09:04,480 --> 00:09:06,840 Speaker 4: the broadening out that a lot of people have been 195 00:09:07,040 --> 00:09:07,640 Speaker 4: hoping for. 196 00:09:08,200 --> 00:09:09,960 Speaker 7: Well, I think that it's I mean, yes, you're going 197 00:09:10,000 --> 00:09:12,080 Speaker 7: to get those reactions, and then you have to see 198 00:09:12,080 --> 00:09:14,720 Speaker 7: where that data comes in and your discussion earlier about 199 00:09:14,720 --> 00:09:17,240 Speaker 7: the FED there, I mean to the extent that they 200 00:09:17,280 --> 00:09:19,400 Speaker 7: may not want to do anything. This sort of gives 201 00:09:19,400 --> 00:09:21,360 Speaker 7: them cover not to do very much for some period 202 00:09:21,360 --> 00:09:23,640 Speaker 7: of time as they sort out what's going on. It 203 00:09:23,679 --> 00:09:25,720 Speaker 7: really is going to depend on where the economic data go, 204 00:09:26,040 --> 00:09:28,920 Speaker 7: and that's going to matter for the small caps enormously 205 00:09:28,960 --> 00:09:30,760 Speaker 7: as well as interest rates. And I think that that 206 00:09:30,920 --> 00:09:33,480 Speaker 7: right now is one of those vulnerabilities that that's an 207 00:09:33,559 --> 00:09:36,840 Speaker 7: economically sensitive area. Not that the rest of the market 208 00:09:36,920 --> 00:09:39,000 Speaker 7: is an economically sensive but it's more so and it's 209 00:09:39,040 --> 00:09:40,840 Speaker 7: more tuned to what's going on in the US economy. 210 00:09:40,960 --> 00:09:44,080 Speaker 7: So I think for those companies, what really matters is 211 00:09:44,120 --> 00:09:47,040 Speaker 7: how things are going on the earnings and the economic front. 212 00:09:47,280 --> 00:09:48,000 Speaker 3: At that point. 213 00:09:48,480 --> 00:09:51,840 Speaker 4: There's a real important message coming from the bond market yesterday, 214 00:09:52,120 --> 00:09:54,719 Speaker 4: where we didn't see a huge rally in the ten 215 00:09:54,760 --> 00:09:56,960 Speaker 4: year yield. We didn't see a huge sell off either 216 00:09:57,040 --> 00:10:00,440 Speaker 4: from some of the inflationary impacts of potential play stry 217 00:10:00,440 --> 00:10:01,400 Speaker 4: impacts of tariffs. 218 00:10:01,800 --> 00:10:03,080 Speaker 3: What was the message to you? 219 00:10:03,440 --> 00:10:06,000 Speaker 4: Was there one or was it just people paralyzed because 220 00:10:06,000 --> 00:10:07,800 Speaker 4: they had no idea how to came it out. 221 00:10:07,920 --> 00:10:11,160 Speaker 7: I think yesterday was It's interesting because I think that 222 00:10:11,240 --> 00:10:13,840 Speaker 7: yesterday the equity markets obviously had a big reaction in 223 00:10:13,880 --> 00:10:15,680 Speaker 7: the morning, but I think that there was some of 224 00:10:15,720 --> 00:10:17,800 Speaker 7: a wait and see attitude about where is this really 225 00:10:17,840 --> 00:10:19,320 Speaker 7: going to go by the end of the day, because 226 00:10:19,360 --> 00:10:22,040 Speaker 7: we know that there is the possibility. I'm having phone calls, 227 00:10:22,080 --> 00:10:24,480 Speaker 7: so that's telling you there's a possibility for this not 228 00:10:24,600 --> 00:10:27,600 Speaker 7: to be as harsh as it sounds at the get go. 229 00:10:27,960 --> 00:10:30,160 Speaker 7: So I think that on the bond market, people were 230 00:10:30,160 --> 00:10:32,640 Speaker 7: more waiting to go. We're not really sure which way 231 00:10:32,640 --> 00:10:34,920 Speaker 7: this is going to go, and it's until you know. 232 00:10:34,920 --> 00:10:37,199 Speaker 7: If it had gone through to today and nothing had 233 00:10:37,280 --> 00:10:39,680 Speaker 7: changed yesterday, I think you would have seen the bigger reaction. 234 00:10:39,760 --> 00:10:42,160 Speaker 7: But I think because that reaction was muted within the 235 00:10:42,160 --> 00:10:44,960 Speaker 7: same day it changed, I think that gave people enough 236 00:10:45,000 --> 00:10:46,880 Speaker 7: time to go it's okay, we can wait before we 237 00:10:46,920 --> 00:10:47,800 Speaker 7: make any major decision. 238 00:10:47,800 --> 00:10:49,280 Speaker 2: I won't debate how much move, but I think on 239 00:10:49,320 --> 00:10:51,240 Speaker 2: this stress test, I think we could take something Awhite 240 00:10:51,240 --> 00:10:54,520 Speaker 2: directionally from what happened. The fact that yields dropped back 241 00:10:54,520 --> 00:10:56,760 Speaker 2: at the long end, it didn't rise. There is something 242 00:10:56,760 --> 00:10:58,440 Speaker 2: to be set. There be mostly and think can make 243 00:10:58,480 --> 00:11:00,960 Speaker 2: that point. We discussed it earlier. The certain parts of 244 00:11:00,960 --> 00:11:03,840 Speaker 2: this market, certain investors have begun to talk about the 245 00:11:03,920 --> 00:11:08,600 Speaker 2: growth risk associated with tariffs, and not exclusively the inflation risk. 246 00:11:08,760 --> 00:11:11,200 Speaker 4: Francis Donald mentioned that it would take about a percent 247 00:11:11,360 --> 00:11:14,000 Speaker 4: off growth in the US if some of these tariffs had. 248 00:11:13,880 --> 00:11:17,000 Speaker 3: Gone into effect. I think you're right on the long end. 249 00:11:17,200 --> 00:11:19,800 Speaker 4: The fact that you saw yield curve flattening, it shows 250 00:11:19,840 --> 00:11:22,440 Speaker 4: that people have a very clear sense of what kind 251 00:11:22,440 --> 00:11:24,200 Speaker 4: of disinflationary hit it could have over the lot. 252 00:11:24,240 --> 00:11:25,719 Speaker 2: I don't know what these tarifts would do. We've talked 253 00:11:25,760 --> 00:11:28,560 Speaker 2: about this repeatedly. By definition, the import paces the tariff, 254 00:11:28,679 --> 00:11:30,800 Speaker 2: how the cost gets distributed. It's going to depend on 255 00:11:30,840 --> 00:11:32,800 Speaker 2: what the goods are. I know this though. You can't 256 00:11:32,840 --> 00:11:37,120 Speaker 2: replace Ferrari. Ferrari coming out with earnings moments ago. Okay, 257 00:11:37,559 --> 00:11:41,480 Speaker 2: FIE sales rising fourteen percent, one in four vehicles sold. 258 00:11:41,480 --> 00:11:44,080 Speaker 2: Guess where in the United States? The stock is up 259 00:11:44,080 --> 00:11:45,600 Speaker 2: this morning by a little more than three percent. 260 00:11:45,679 --> 00:11:48,000 Speaker 4: You can't replace Ferrari, but some of us can't afford it, 261 00:11:48,040 --> 00:11:50,160 Speaker 4: so it would be really nice to, you know, share 262 00:11:50,200 --> 00:11:50,680 Speaker 4: it once. 263 00:11:50,559 --> 00:11:51,040 Speaker 7: In a while. 264 00:11:51,200 --> 00:11:52,120 Speaker 3: Let me have the keys. 265 00:11:53,440 --> 00:11:56,199 Speaker 4: So obviously, you know you can enjoy it. 266 00:11:56,320 --> 00:11:56,800 Speaker 3: I can't. 267 00:11:56,880 --> 00:11:59,240 Speaker 5: Not many people can afford Opus one either. 268 00:11:59,000 --> 00:12:02,440 Speaker 4: Brand I know, you know, it's sort of the perception is, 269 00:12:02,800 --> 00:12:04,960 Speaker 4: you know that it's a really wonderful car, and I 270 00:12:05,000 --> 00:12:06,720 Speaker 4: just wonder if any of this will dep that perception. 271 00:12:06,920 --> 00:12:09,680 Speaker 2: Yes, agreed, going to see it, Sarah, Thank you as always, 272 00:12:09,679 --> 00:12:22,319 Speaker 2: Sarah Hummett of Vampine Saxon Wood. George Sarah Vellos of 273 00:12:22,360 --> 00:12:25,200 Speaker 2: Deutsche Bank saying euro dollar is a risk of parity, 274 00:12:25,440 --> 00:12:27,920 Speaker 2: writing the drivers of euro dollar can be broken down 275 00:12:27,960 --> 00:12:33,319 Speaker 2: into two parts, relative monetary policy and the tariff risk premium. George, 276 00:12:33,400 --> 00:12:35,400 Speaker 2: John just now for more, George, welcome to the program. 277 00:12:35,440 --> 00:12:38,840 Speaker 2: Let's talk about the second part, that tariff risk premium. 278 00:12:38,920 --> 00:12:39,560 Speaker 2: How big is that? 279 00:12:41,760 --> 00:12:42,600 Speaker 8: So, John, I. 280 00:12:42,640 --> 00:12:45,640 Speaker 9: Think it's the key question for the next few months, 281 00:12:45,720 --> 00:12:48,760 Speaker 9: and on our end, we're not spending much time trying 282 00:12:48,760 --> 00:12:50,600 Speaker 9: to predict what President trub will do. 283 00:12:51,120 --> 00:12:52,760 Speaker 8: I think the experience of the last few days has 284 00:12:52,760 --> 00:12:54,559 Speaker 8: shown it's not a very fruitful exercise. 285 00:12:55,000 --> 00:12:57,360 Speaker 9: It's all about trying to figure out what the market's 286 00:12:57,400 --> 00:13:01,080 Speaker 9: pricing and therefore the risk distribution around its events. And 287 00:13:01,160 --> 00:13:03,560 Speaker 9: when we look at the so called tariff risk premium, 288 00:13:03,600 --> 00:13:06,000 Speaker 9: and you can see in many different parts of the market. 289 00:13:06,080 --> 00:13:08,520 Speaker 9: You can see in the US inflation curve, you can 290 00:13:08,559 --> 00:13:10,040 Speaker 9: see in the deviation. 291 00:13:09,640 --> 00:13:10,920 Speaker 8: Of the dollar from fair value. 292 00:13:11,480 --> 00:13:13,440 Speaker 9: You can even see in what's known as the EFP 293 00:13:14,000 --> 00:13:16,760 Speaker 9: in COMEX futures for gold. When we look at all 294 00:13:16,800 --> 00:13:19,800 Speaker 9: these tariff metrics, they've been send me a consistent message 295 00:13:20,000 --> 00:13:23,119 Speaker 9: that the market's pricing a very limited tariff risk premium. 296 00:13:23,280 --> 00:13:27,080 Speaker 9: It again tried to price more yesterday. It's now reverted back, 297 00:13:27,240 --> 00:13:30,640 Speaker 9: but it's precisely because that tariff premium is still quite low. 298 00:13:30,880 --> 00:13:35,280 Speaker 9: But we see the risk distribution skewed towards essentially pricing 299 00:13:35,320 --> 00:13:37,800 Speaker 9: in more tariffs if and when they materialize. 300 00:13:37,960 --> 00:13:40,040 Speaker 2: George, is that just the euro or can you say 301 00:13:40,040 --> 00:13:41,720 Speaker 2: the same thing about the Chinese currency? 302 00:13:43,400 --> 00:13:44,920 Speaker 8: I would say it's across the board. 303 00:13:45,000 --> 00:13:48,200 Speaker 9: If you're looking at all global markets, whether you're looking 304 00:13:48,240 --> 00:13:51,360 Speaker 9: at fixed income and the so called inflation hump that's 305 00:13:51,400 --> 00:13:54,679 Speaker 9: pricing to break events. It is still that inflation hump 306 00:13:55,000 --> 00:13:58,440 Speaker 9: is still very low. It is definitely valid for the 307 00:13:58,520 --> 00:14:01,360 Speaker 9: dollar when you're looking at the euro, for example, when 308 00:14:01,360 --> 00:14:05,080 Speaker 9: we mentioned parity, that is not a forecaster to speak 309 00:14:05,120 --> 00:14:08,240 Speaker 9: at seven stone. It's just that if you get a 310 00:14:08,400 --> 00:14:11,440 Speaker 9: reasonable outcome in terms of tariffs around the midpoint of 311 00:14:11,480 --> 00:14:14,520 Speaker 9: the range that's been discussed, that's where we'd get to. 312 00:14:14,800 --> 00:14:17,160 Speaker 9: Of course, if you're gett even worse outcomes, it could 313 00:14:17,200 --> 00:14:20,520 Speaker 9: be bigger. China is more difficult because this is a 314 00:14:20,560 --> 00:14:24,760 Speaker 9: policy determined currency. The market is not free floating, and 315 00:14:24,840 --> 00:14:28,640 Speaker 9: I think this one is where the specific policy choices 316 00:14:28,680 --> 00:14:31,280 Speaker 9: by the authorities will play much bigger role. 317 00:14:31,640 --> 00:14:35,040 Speaker 4: George, you talk about the trade war risk premium, and 318 00:14:35,080 --> 00:14:38,600 Speaker 4: that typically has been strong dollar. We've been talking on 319 00:14:38,640 --> 00:14:42,080 Speaker 4: the show about at what point the hangover effect of 320 00:14:42,080 --> 00:14:45,600 Speaker 4: the tip for tad of trade negotiations trade wars ends 321 00:14:45,760 --> 00:14:48,040 Speaker 4: up with the rest of the world trying to withdraw 322 00:14:48,080 --> 00:14:51,320 Speaker 4: money from the United States, not put money into the 323 00:14:51,480 --> 00:14:54,800 Speaker 4: United States. How much and how closely are you watching 324 00:14:54,840 --> 00:14:58,880 Speaker 4: what indicators to maybe suggest that the appetite for the 325 00:14:58,920 --> 00:15:00,640 Speaker 4: dollar or serring to wane. 326 00:15:02,160 --> 00:15:05,320 Speaker 9: That's a great question, and I think a very important one. 327 00:15:05,480 --> 00:15:07,840 Speaker 9: So the way we think about it, first of all 328 00:15:08,000 --> 00:15:12,040 Speaker 9: is relative economic impact. You have to think about currencies 329 00:15:12,080 --> 00:15:14,880 Speaker 9: in that way, and the US possesses a number of 330 00:15:14,960 --> 00:15:18,800 Speaker 9: unique features. It's the world's largest economy, it has the 331 00:15:18,920 --> 00:15:22,720 Speaker 9: lowest share of trade, it has a big trade deficit, 332 00:15:22,840 --> 00:15:24,560 Speaker 9: and it's very service is intensive. 333 00:15:24,800 --> 00:15:26,720 Speaker 8: And President Trump, of course knows all these things. 334 00:15:26,800 --> 00:15:30,120 Speaker 9: But what that means is that every time tariffs are threatened, 335 00:15:30,640 --> 00:15:33,560 Speaker 9: it has an asymmetric impact on the rest of the world, 336 00:15:33,600 --> 00:15:36,480 Speaker 9: and that's exactly why the dollar is strengthening. I think 337 00:15:36,520 --> 00:15:38,800 Speaker 9: what you need to see for an unraveling of the 338 00:15:38,840 --> 00:15:42,720 Speaker 9: inflows you allude to is essentially a big US centric 339 00:15:42,840 --> 00:15:46,560 Speaker 9: growth slowdown that's more sharp than the rest of the 340 00:15:46,560 --> 00:15:50,200 Speaker 9: world that causes the FED to become more dovish. And 341 00:15:50,280 --> 00:15:53,200 Speaker 9: so far, especially given that tariffs are tied in with 342 00:15:53,320 --> 00:15:56,880 Speaker 9: the fiscal negotiations, potentially in a fiscal expansion, we don't 343 00:15:56,880 --> 00:15:57,760 Speaker 9: see any signs of that. 344 00:15:58,320 --> 00:16:00,560 Speaker 4: In the meantime, there is the like we heard, as 345 00:16:00,560 --> 00:16:03,920 Speaker 4: you said, the disproportionate effect in other countries that if 346 00:16:04,000 --> 00:16:06,680 Speaker 4: tariffs do go into effect or even the suggestion of them, 347 00:16:06,680 --> 00:16:08,960 Speaker 4: will slow economies like Canada. We heard that from the 348 00:16:09,000 --> 00:16:12,600 Speaker 4: Bank of Canada or potentially in the European Union. On 349 00:16:12,640 --> 00:16:16,080 Speaker 4: the margins, even though this is a single mandate ECB. 350 00:16:16,280 --> 00:16:19,480 Speaker 4: Do you expect them to cut rates more aggressively to 351 00:16:19,600 --> 00:16:22,000 Speaker 4: counteract some of that potential growth shock? 352 00:16:23,640 --> 00:16:25,920 Speaker 8: Well, again, the ECB is a huge focus. 353 00:16:25,960 --> 00:16:28,160 Speaker 9: And to go back to the point around the tariff 354 00:16:28,240 --> 00:16:31,400 Speaker 9: screemom that was priced in uptil last week, the market 355 00:16:31,440 --> 00:16:33,480 Speaker 9: was pricing the ECB to stop. 356 00:16:33,520 --> 00:16:36,480 Speaker 8: Above two around two point one two point two. Now, 357 00:16:36,480 --> 00:16:39,480 Speaker 8: if you think about that, that was the upper end of. 358 00:16:39,400 --> 00:16:43,120 Speaker 9: The neutral range, which Leguard alluded to two twenty five 359 00:16:43,360 --> 00:16:45,720 Speaker 9: to one seventy five. So of you on the ECB 360 00:16:45,880 --> 00:16:48,800 Speaker 9: has definitely been more dubbish than market pricing. If you 361 00:16:48,840 --> 00:16:52,359 Speaker 9: take a step back, European growth is below trend. Forwardlooking 362 00:16:52,440 --> 00:16:56,480 Speaker 9: numbers of inflation are pointing at or below trend. You've 363 00:16:56,480 --> 00:16:59,360 Speaker 9: got a net fiscal stances tightening and tariff risks. 364 00:16:59,720 --> 00:17:02,400 Speaker 8: So we see the ECB potentially cutting down to one 365 00:17:02,400 --> 00:17:02,920 Speaker 8: point fifty. 366 00:17:03,360 --> 00:17:05,879 Speaker 9: The market has adjusted over the last few days, but 367 00:17:06,080 --> 00:17:08,720 Speaker 9: I think especially versus the Fed, we see that rate 368 00:17:08,760 --> 00:17:10,600 Speaker 9: differential widening again. 369 00:17:10,520 --> 00:17:12,919 Speaker 5: Essent George mention it. I just want to jump in. 370 00:17:13,240 --> 00:17:17,200 Speaker 2: I'm surprised that that's even somewhat contrarian right now. It's 371 00:17:17,240 --> 00:17:19,680 Speaker 2: surprising to me that ECB officials are still talking about 372 00:17:19,720 --> 00:17:22,560 Speaker 2: neutral and not talking about getting accommodative. 373 00:17:22,600 --> 00:17:23,760 Speaker 5: When's that going to change? 374 00:17:25,040 --> 00:17:27,080 Speaker 9: So it's a very interesting point in your age, John, 375 00:17:27,119 --> 00:17:29,080 Speaker 9: because the narrative in the market is. 376 00:17:29,040 --> 00:17:30,600 Speaker 8: That the ECB should be cutting more. 377 00:17:30,640 --> 00:17:33,439 Speaker 9: But I always like distinguishing between the narrative and what 378 00:17:33,560 --> 00:17:35,200 Speaker 9: ultimately matters, which is pricing. 379 00:17:35,520 --> 00:17:36,800 Speaker 8: And if you look at market. 380 00:17:36,520 --> 00:17:39,040 Speaker 9: Pricing for the ECB has been fairly hawkish, it's been 381 00:17:39,080 --> 00:17:42,760 Speaker 9: above two. Why has that been the case? You have 382 00:17:42,920 --> 00:17:45,760 Speaker 9: had sun rise and energy prices and the ECB sensitive 383 00:17:45,800 --> 00:17:49,040 Speaker 9: to that. But I think crucially it's the ECB communication, 384 00:17:49,520 --> 00:17:54,520 Speaker 9: especially from those hawkish members for example Governing Council member 385 00:17:54,520 --> 00:17:57,760 Speaker 9: Shabul And I think what is required to change is 386 00:17:57,800 --> 00:18:02,080 Speaker 9: for these members to gradually set that the ECB is 387 00:18:02,080 --> 00:18:04,600 Speaker 9: going to need more, to do more, and I think 388 00:18:04,600 --> 00:18:06,240 Speaker 9: we will get that over the next few months. 389 00:18:06,280 --> 00:18:09,040 Speaker 2: Hey, George Clinic from you as always a foreign exchange. 390 00:18:09,080 --> 00:18:11,720 Speaker 2: Appreciate your time, George Saravelos there of Deutsche Bank. 391 00:18:21,960 --> 00:18:23,240 Speaker 5: Let's turn to the auto industry. 392 00:18:23,280 --> 00:18:26,600 Speaker 2: Danaives have wet Bush is not overly concerned about Tariff's writing. 393 00:18:26,640 --> 00:18:29,040 Speaker 2: The supply chain kind adjust to a near term shock 394 00:18:29,119 --> 00:18:30,360 Speaker 2: and weather the storm. 395 00:18:30,440 --> 00:18:31,840 Speaker 5: If these tariffs stand place. 396 00:18:31,640 --> 00:18:34,240 Speaker 2: For thirty to sixty days, we see minimal impact to 397 00:18:34,320 --> 00:18:36,880 Speaker 2: GM and to Ford Dan John's just now for more 398 00:18:36,960 --> 00:18:39,520 Speaker 2: Dank and Monic greed to be here thirty days. If 399 00:18:39,560 --> 00:18:42,200 Speaker 2: we got that in thirty days and they lasted thirty days, 400 00:18:42,440 --> 00:18:43,879 Speaker 2: are we only saying there's only going to be like 401 00:18:43,920 --> 00:18:46,440 Speaker 2: minimal damage? Does this not hold these companies back from 402 00:18:46,480 --> 00:18:47,440 Speaker 2: making big decisions? 403 00:18:47,520 --> 00:18:49,399 Speaker 6: I think it's the minimum. I mean, I'll be in Detroit, 404 00:18:49,520 --> 00:18:52,080 Speaker 6: you know tomorrow. I think ultimately right now in terms 405 00:18:52,119 --> 00:18:55,360 Speaker 6: of GM four, it's very continue. In terms of the impact, 406 00:18:55,560 --> 00:18:57,520 Speaker 6: I think when you were good TAB so that's probably 407 00:18:57,520 --> 00:19:01,280 Speaker 6: the one that's weezed impacted, especially given their supply chain. 408 00:19:01,560 --> 00:19:04,040 Speaker 6: But our view is here bark worse than the bite, 409 00:19:04,119 --> 00:19:06,520 Speaker 6: whether it's on the auto side, and I continue view 410 00:19:06,560 --> 00:19:08,960 Speaker 6: on the China side, even on chips, even though that's 411 00:19:09,359 --> 00:19:12,800 Speaker 6: pressuring names Nvidio and others. Just as we've navigated in 412 00:19:12,800 --> 00:19:15,960 Speaker 6: twenty eighteen twenty nineteen. You don't sell these socks because 413 00:19:15,960 --> 00:19:18,440 Speaker 6: of it, because I continue view, just like you talk 414 00:19:18,480 --> 00:19:20,680 Speaker 6: about where is this spending? I think it's gonna be 415 00:19:20,720 --> 00:19:24,439 Speaker 6: another robust number from Google tonight saw Palatine and other's 416 00:19:24,520 --> 00:19:27,679 Speaker 6: AI revolution alive and well. Tariffs are not impact that 417 00:19:27,760 --> 00:19:28,240 Speaker 6: in our view. 418 00:19:28,520 --> 00:19:31,720 Speaker 4: One of the reasons why your analysis is particularly special. 419 00:19:31,760 --> 00:19:33,239 Speaker 4: It's not just because you've been right about a lot 420 00:19:33,280 --> 00:19:35,960 Speaker 4: of it, but also you travel a lot, you talk 421 00:19:36,000 --> 00:19:39,240 Speaker 4: to people, you see the sentiment. Has there been, even 422 00:19:39,240 --> 00:19:42,119 Speaker 4: in the past couple days, any sort of shift in 423 00:19:42,160 --> 00:19:44,160 Speaker 4: the optimism because of the uncertainty. 424 00:19:44,480 --> 00:19:47,240 Speaker 6: Yeah, I think less about like in terms of Mexico 425 00:19:47,440 --> 00:19:49,679 Speaker 6: and what we're seeing Cana. It's more it's from a 426 00:19:49,800 --> 00:19:53,720 Speaker 6: China tariff perspective combined with deep seek. I think there's 427 00:19:53,840 --> 00:19:56,600 Speaker 6: just general meybium a little more adjita in terms of 428 00:19:56,640 --> 00:19:58,960 Speaker 6: what that means in terms of US China cold tech 429 00:19:59,000 --> 00:20:02,200 Speaker 6: war tariffs, what the next step is. Because part of 430 00:20:02,240 --> 00:20:03,920 Speaker 6: the issue is if you go back to this last week, 431 00:20:04,040 --> 00:20:07,399 Speaker 6: Nadella doubles down eighty million, Zuckerberg sixty five billion, you 432 00:20:07,480 --> 00:20:10,920 Speaker 6: see just massive cap backs tonight from Google, pound tier 433 00:20:10,960 --> 00:20:14,119 Speaker 6: and messy AI just another phenomenal quarter. I think the 434 00:20:14,200 --> 00:20:17,440 Speaker 6: worry is could anything spoil the party? And the only 435 00:20:17,480 --> 00:20:20,440 Speaker 6: thing that spoils the party is rattioning up in terms 436 00:20:20,480 --> 00:20:22,919 Speaker 6: of US China tension. So I think in terms of 437 00:20:22,920 --> 00:20:26,320 Speaker 6: the nervousness. That's why you're seeing pressure on Nvidia on 438 00:20:26,520 --> 00:20:29,520 Speaker 6: overall tech here. You know, as this plays out. 439 00:20:29,400 --> 00:20:31,560 Speaker 4: GM was supposed to be immune from this because they 440 00:20:31,560 --> 00:20:34,760 Speaker 4: actually moved their operations and their business out of China, 441 00:20:34,880 --> 00:20:36,280 Speaker 4: largely to Mexico. 442 00:20:36,680 --> 00:20:38,000 Speaker 3: Now they're in the crosshairs. 443 00:20:38,240 --> 00:20:41,920 Speaker 4: I just wonder if other tech companies in particular are 444 00:20:41,920 --> 00:20:45,840 Speaker 4: moving operations out of China more aggressively to immunize themselves 445 00:20:45,880 --> 00:20:46,840 Speaker 4: from this type of shock. 446 00:20:46,920 --> 00:20:48,960 Speaker 6: Yeah, I mean like to that. Look in GM, it's 447 00:20:49,040 --> 00:20:51,560 Speaker 6: been sort of one punch after another from the ev 448 00:20:51,800 --> 00:20:54,520 Speaker 6: perspective in terms of from one administration to the other. 449 00:20:54,880 --> 00:20:57,760 Speaker 6: The Mexico situation, I do believe, you know, marrying the 450 00:20:57,800 --> 00:21:01,320 Speaker 6: team navigated that extremely well, and thing GM continues to 451 00:21:01,400 --> 00:21:03,600 Speaker 6: be a start that we're bullsh on here in terms 452 00:21:03,680 --> 00:21:07,119 Speaker 6: on the China side. Look, we talked about if Apple 453 00:21:07,280 --> 00:21:09,320 Speaker 6: decided today, if timberog is like we're gonna move ten 454 00:21:09,320 --> 00:21:12,640 Speaker 6: percent of our supply chain out of China, that would 455 00:21:12,680 --> 00:21:17,119 Speaker 6: basically take about two years and ultimately something that could 456 00:21:17,119 --> 00:21:19,520 Speaker 6: cost you know what, I think thirty forty billion if 457 00:21:19,520 --> 00:21:24,040 Speaker 6: it ultimately translated. The point is that it's always easier 458 00:21:24,080 --> 00:21:27,240 Speaker 6: said than done. And I think that's the conundrum because 459 00:21:27,280 --> 00:21:29,600 Speaker 6: the reality is like when you look at Apple, you 460 00:21:29,640 --> 00:21:33,040 Speaker 6: look at Tesla. That's why Cook must ten percent politician 461 00:21:33,480 --> 00:21:34,720 Speaker 6: ninety percent CEOs. 462 00:21:34,840 --> 00:21:37,920 Speaker 2: Let's talk about Elon Musk and the closeness to the administration. 463 00:21:38,000 --> 00:21:40,080 Speaker 2: We've talked about the benefits of that closeness and what 464 00:21:40,080 --> 00:21:43,080 Speaker 2: it could mean, the halo effectors you've talked about over Tesla. 465 00:21:43,480 --> 00:21:46,240 Speaker 2: Foreign nations are starting to see this as a potential 466 00:21:46,280 --> 00:21:48,760 Speaker 2: pressure point. We saw that from a Canadian province in 467 00:21:48,800 --> 00:21:52,160 Speaker 2: the last twenty four hours threatening to cancel a Starlin contract. 468 00:21:52,240 --> 00:21:53,600 Speaker 2: Is it a benefit or not? 469 00:21:54,000 --> 00:21:56,840 Speaker 6: You know, there are definitely offsets, as we've talked about. 470 00:21:56,920 --> 00:21:59,200 Speaker 6: But with the goal at the end of the rainbow 471 00:21:59,800 --> 00:22:03,520 Speaker 6: is autonomous, I mean autonomous, we think that that's worth 472 00:22:03,520 --> 00:22:06,760 Speaker 6: a trillion dollars in terms of that to the Tesla story. 473 00:22:07,000 --> 00:22:09,199 Speaker 6: I think as you get a federal framework, and I 474 00:22:09,200 --> 00:22:11,480 Speaker 6: think this is key in terms of the Trump administration, 475 00:22:12,000 --> 00:22:15,440 Speaker 6: that is really that's the path for growth in terms 476 00:22:15,480 --> 00:22:18,800 Speaker 6: of what I view as generational growth for Tesla. So Musk, 477 00:22:19,400 --> 00:22:23,280 Speaker 6: he's someone he's not gonna ultimately peel back, right, So 478 00:22:23,359 --> 00:22:26,360 Speaker 6: he's going to continue going down in this direction. There's negatives, 479 00:22:26,400 --> 00:22:29,520 Speaker 6: no doubt, should I just think them positives? It was 480 00:22:29,520 --> 00:22:32,240 Speaker 6: a bet for the ages on Trump and it continues 481 00:22:32,320 --> 00:22:34,240 Speaker 6: to be that, and I think it's going to be historical. 482 00:22:34,560 --> 00:22:37,399 Speaker 2: The President clearly wants to celebrate the national champions of 483 00:22:37,440 --> 00:22:42,040 Speaker 2: American at Corporate America and Suwy should swe should Let's 484 00:22:42,040 --> 00:22:44,400 Speaker 2: be clear about that. The question I'm asking is whether 485 00:22:44,480 --> 00:22:47,960 Speaker 2: other countries begin to punish those national champions. We've seen 486 00:22:48,000 --> 00:22:50,160 Speaker 2: that from the Europeans on tech. We've seen the tech 487 00:22:50,200 --> 00:22:52,600 Speaker 2: plans not even be able to get into China. Test 488 00:22:52,600 --> 00:22:53,480 Speaker 2: that's a round one. 489 00:22:53,560 --> 00:22:57,000 Speaker 6: It's very rare. I mean Tesla and Apple you put 490 00:22:57,080 --> 00:23:00,439 Speaker 6: on just a different perch because there is about with 491 00:23:00,520 --> 00:23:03,520 Speaker 6: Google they have an operator in China who cares. China's 492 00:23:03,520 --> 00:23:07,600 Speaker 6: actually the only two tech companies. It's Tesla and it's Apple. 493 00:23:08,000 --> 00:23:12,399 Speaker 6: And that's why that's the tight groupe, right because for Musk, 494 00:23:12,440 --> 00:23:14,240 Speaker 6: and that's also why even when it comes down to 495 00:23:14,440 --> 00:23:17,359 Speaker 6: TikTok and we continue to think Musk or Allison is 496 00:23:17,359 --> 00:23:19,720 Speaker 6: probably in the front runners in terms of what potentially 497 00:23:19,760 --> 00:23:23,800 Speaker 6: is that asset sell. But for Elon right now, it's 498 00:23:24,040 --> 00:23:27,439 Speaker 6: navigating this whole thing by continue viewing him more entrenched 499 00:23:27,440 --> 00:23:30,000 Speaker 6: in the Beltway. Despite all the noise, is the best 500 00:23:30,040 --> 00:23:32,040 Speaker 6: thing that ever happened in Tesla's shareholders. 501 00:23:32,280 --> 00:23:35,800 Speaker 4: To your point, John, last month, Tesla sales fell sixty 502 00:23:35,840 --> 00:23:39,400 Speaker 4: three percent in France. That is because in large part 503 00:23:39,440 --> 00:23:42,280 Speaker 4: people were taking a look at the political backdrop. 504 00:23:41,840 --> 00:23:44,320 Speaker 3: And saying, nahuh, this isn't our gig. 505 00:23:44,800 --> 00:23:48,200 Speaker 4: I do wonder if there is some reputational damage being 506 00:23:48,240 --> 00:23:51,000 Speaker 4: done in the longer term where people are looking at 507 00:23:51,040 --> 00:23:53,600 Speaker 4: what's going on some of the tactics and they're saying, 508 00:23:53,920 --> 00:23:55,119 Speaker 4: let's look elsewhere. 509 00:23:55,240 --> 00:23:56,639 Speaker 3: Are you seeing that in any capacity? 510 00:23:56,720 --> 00:23:59,119 Speaker 6: Look, I think it's contained in terms of the demand 511 00:23:59,240 --> 00:24:02,199 Speaker 6: issues that may that they've seen from a negative perspective, 512 00:24:02,240 --> 00:24:04,760 Speaker 6: you know, because of it. But Bogies, I think the 513 00:24:04,800 --> 00:24:07,600 Speaker 6: most important thing is when you think about autonomous, you 514 00:24:07,680 --> 00:24:10,840 Speaker 6: think about robotics. I mean, that's really the testlo star. 515 00:24:10,880 --> 00:24:14,360 Speaker 6: I think ninety percent of the story today is about that. 516 00:24:14,640 --> 00:24:17,080 Speaker 6: So there could definitely be some demand issues. We'll call 517 00:24:17,119 --> 00:24:19,840 Speaker 6: it contained with the streets focused. And you saw it 518 00:24:19,880 --> 00:24:22,840 Speaker 6: last week, right like the Bears scratching their heads like 519 00:24:22,880 --> 00:24:25,239 Speaker 6: why is this stock not going down given numbers got 520 00:24:25,280 --> 00:24:29,000 Speaker 6: low because the street is focused on autonomous robotics, and 521 00:24:29,440 --> 00:24:31,480 Speaker 6: that ultimately, if you look where they are in the 522 00:24:31,560 --> 00:24:35,160 Speaker 6: Trump administration, Musk is in a you know, he continues 523 00:24:35,200 --> 00:24:39,680 Speaker 6: to play chess, others playing checkers. Relative to this situation. 524 00:24:39,400 --> 00:24:41,440 Speaker 4: One of the big arguments, especially as the China US 525 00:24:41,520 --> 00:24:44,600 Speaker 4: trade war really heats up, or trade dance, whatever you 526 00:24:44,640 --> 00:24:46,920 Speaker 4: want to call it, there is a question about whether 527 00:24:46,920 --> 00:24:49,640 Speaker 4: it pushes China even more to develop a parallel tech 528 00:24:49,680 --> 00:24:52,520 Speaker 4: sphere to the US that becomes dominant in its own 529 00:24:52,600 --> 00:24:55,040 Speaker 4: right that might be more amenable to a number of 530 00:24:55,080 --> 00:24:57,959 Speaker 4: countries around the world. How realistic is that to you? 531 00:24:58,040 --> 00:24:59,840 Speaker 4: Does that become more of a possibility. 532 00:25:00,119 --> 00:25:03,439 Speaker 6: I think it's not realistic just because in video, I mean, 533 00:25:03,480 --> 00:25:06,840 Speaker 6: we just continue at high scale GPUs in terms of 534 00:25:07,080 --> 00:25:10,399 Speaker 6: true buildouts you need video. There's one red phone that 535 00:25:10,440 --> 00:25:13,000 Speaker 6: goes to Jensen. Now obviously deep seat. That was kind 536 00:25:13,000 --> 00:25:15,439 Speaker 6: of the white knock on moment. Everyone's like, does this 537 00:25:15,600 --> 00:25:17,439 Speaker 6: change the whole narrative? But I think it's more has 538 00:25:17,440 --> 00:25:20,119 Speaker 6: come out about that people realize, you know, maybe the 539 00:25:20,160 --> 00:25:22,399 Speaker 6: barker's a lot worse than the bite. Look, you'll have 540 00:25:22,520 --> 00:25:25,520 Speaker 6: a decoupling in terms of what's happened China in the US, 541 00:25:25,560 --> 00:25:29,880 Speaker 6: but negotiations. It's so important because again US needs China 542 00:25:29,960 --> 00:25:33,320 Speaker 6: needs US, and I think that's why it's very very important, 543 00:25:33,400 --> 00:25:35,960 Speaker 6: especially when it comes to chips, that this could be 544 00:25:36,200 --> 00:25:38,960 Speaker 6: the coupling. But not get in the way of what 545 00:25:39,160 --> 00:25:42,680 Speaker 6: I've u as a generational tech environment in terms of 546 00:25:42,880 --> 00:25:45,000 Speaker 6: you know what we see with AI in video months 547 00:25:45,000 --> 00:25:46,320 Speaker 6: to run up over the last few years. 548 00:25:46,600 --> 00:25:48,600 Speaker 2: Got to say that up front, but twenty two percent 549 00:25:48,720 --> 00:25:51,399 Speaker 2: draw down in the past few months, why hasn't that 550 00:25:51,440 --> 00:25:53,720 Speaker 2: stuffed recounted? We had a weight we worked out of the 551 00:25:53,720 --> 00:25:55,520 Speaker 2: deep seek ITTs, maybe not what people thought it was, 552 00:25:56,160 --> 00:25:58,240 Speaker 2: and here we are, we're still rolling over. 553 00:25:58,960 --> 00:26:01,200 Speaker 6: And I think that there's a few reasons. One it's 554 00:26:01,200 --> 00:26:04,600 Speaker 6: just like Microsoft has you know, Apple that they've sold 555 00:26:04,640 --> 00:26:07,000 Speaker 6: even after I think better than fear numbers. I think 556 00:26:07,040 --> 00:26:10,960 Speaker 6: there's there's worries just in general about like can they 557 00:26:11,080 --> 00:26:14,879 Speaker 6: continue to sustain it if any little thing happens flying 558 00:26:14,920 --> 00:26:17,400 Speaker 6: the ointment stock gets crushed. So you've seen a little 559 00:26:17,440 --> 00:26:19,640 Speaker 6: bit of a risk off. But look, I just continue 560 00:26:19,680 --> 00:26:22,520 Speaker 6: to view it. Six nine months from now, we look 561 00:26:22,640 --> 00:26:26,400 Speaker 6: back at this as a golden buying opportunity, not the 562 00:26:26,440 --> 00:26:30,120 Speaker 6: time where there's something structurally wrong and numbers. 563 00:26:29,720 --> 00:26:31,920 Speaker 2: Going on, Oh, we've just found betef exos to the play 564 00:26:32,000 --> 00:26:33,439 Speaker 2: the same, which is talents it. 565 00:26:33,600 --> 00:26:36,439 Speaker 6: But to that point, that's why you look at like 566 00:26:37,000 --> 00:26:40,080 Speaker 6: again that that's a if you look at that Pollenteer quarter, 567 00:26:40,160 --> 00:26:42,119 Speaker 6: they could print that press release off put in the 568 00:26:42,200 --> 00:26:44,679 Speaker 6: lover in terms of just how strong it was, and 569 00:26:44,760 --> 00:26:48,280 Speaker 6: it shows what they're doing in terms of Pollenteers, I 570 00:26:48,320 --> 00:26:50,399 Speaker 6: believe one of the best plays in AI. But to 571 00:26:50,480 --> 00:26:53,840 Speaker 6: your point, there are look as a second third derivatives 572 00:26:53,880 --> 00:26:57,080 Speaker 6: take hold from Google to Salesforce to others. There's gonna 573 00:26:57,080 --> 00:26:59,359 Speaker 6: be other ways to play. It's not just about Mac seven. 574 00:26:59,440 --> 00:27:01,200 Speaker 6: There's there's that play. 575 00:27:00,960 --> 00:27:04,560 Speaker 2: Into this next to the Mona Lisa untamed Ai demand. 576 00:27:05,160 --> 00:27:08,720 Speaker 6: Right to and then there's I think that that that's. 577 00:27:08,560 --> 00:27:12,119 Speaker 2: Could be where Larco twin NFT special VP tickets something 578 00:27:12,160 --> 00:27:12,440 Speaker 2: like that. 579 00:27:13,240 --> 00:27:16,080 Speaker 6: It's twenty it's going to see you. 580 00:27:16,480 --> 00:27:17,760 Speaker 5: Thanks, thank you. 581 00:27:17,800 --> 00:27:19,440 Speaker 2: A lot to talk about in tech right now, that's 582 00:27:19,440 --> 00:27:23,119 Speaker 2: for sure, Dan of Webish there. This is the Bloomberg 583 00:27:23,160 --> 00:27:27,879 Speaker 2: Surveillance Podcast, bringing you the best in markets, economics, angiot politics. 584 00:27:28,119 --> 00:27:30,600 Speaker 2: You can watch the show live on Bloomberg TV weekday 585 00:27:30,640 --> 00:27:33,879 Speaker 2: mornings from six am to nine am Eastern subscribe to 586 00:27:33,880 --> 00:27:37,119 Speaker 2: the podcast on Apple, Spotify or anywhere else you listen, 587 00:27:37,400 --> 00:27:40,000 Speaker 2: and as always, on the Bloomberg Terminal and the Bloomberg 588 00:27:40,040 --> 00:27:40,600 Speaker 2: Business app.